Public Enterprise Management Through State Holding Companies

Abstract

Concerns about public enterprise management, especially since the 1980s, have been closely associated with more generalized concerns about the role of the state in processes of production. Whether in specific enterprises or industries in the context of a mixed market economy, or across the entire economy, in a system of centralized planning, state owned and operated production units have been associated with economic inefficiencies leading to lower relative levels of output, a diversion of resources from their most productive uses and internal economic inefficiencies in management and motivation within the productive unit.¹ A major cause of the economic inefficiencies of public enterprises is the difficulty of reconciling the multiple political, social and ideological aims of governments and government-appointed managers guiding the operations of these enterprises, with the achievement of economic efficiency. These concerns have led to the adoption of a wide spectrum of mechanisms to modify or alter the controls and obligations between governments and state owned enterprises to better achieve these multiple and sometimes conflicting objectives.